Weekly Law Resume - July 22, 2010: Coverage - Pre-Existing Damage Exclusion


After the Montrose Chemical Corp. of California v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 669- 670 decision, insurance companies attempted to limit the effect of that decision to eliminate potential coverage for claims that arose prior to their policy period. This case concerns one of those attempts.

D.A. Whitacre Construction, Inc., a framing subcontractor, was insured under a Comprehensive General Liability policy issued by Pennsylvania General Insurance Company from 1998 through 2001. During that time, it performed work on a project for GAFCON Construction Company. Thereafter, Whitacre was insured by American Safety Indemnity Company from 2001 through 2002. Whitacre was sued for work done on the project. Whitacre tendered to both Pennsylvania General and ASIC. Pennsylvania General accepted the tender under a reservation of rights, and ultimately paid all defense and settlement costs. ASIC declined the tender. After the suit was settled, Pennsylvania General sued ASIC, seeking equitable contribution. The trial court granted ASIC's motion for summary judgment and Pennsylvania General appealed.

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